Confidential records: to share or not to share?

Can foreign companies use U.S. courts to get information about American companies not available under the rules of foreign boards?

American companies that conduct business overseas can be investigated at any time by agencies in other countries, reported the National Association of Manufacturers, but those agencies often have more limited rules for information gathering than what is allowed in U.S. courts. So if and/or when U.S. companies can be ordered to release confidential records to foreign bodies is far from clear.

The U.S. Supreme Court is expected to tackle the issue this year when it hears arguments in the case Intel Corp. v. Advanced Micro Devices Inc. The high court recently stepped into a dispute between the two high-tech competitors, agreeing to clarify when U.S. companies can be required to release confidential records to foreign regulators.

Intel Corp. is fighting a California appeals court ruling that may force it to release documents to the European Commission, a regulatory board that enforces European Union antitrust law. The commission has conducted a preliminary investigation of Intel, based on an antitrust complaint by rival Advanced Micro Devices Inc. The competitor contends that Intel abused its position as the world's leading computer-chip maker to keep other companies from winning market share in Europe.

In 2001, Advanced Micro Devices asked a federal judge in California to help them get documents from Intel to give to the European Commission. The judge refused to help in the company's request for documents, which were part of another court case and kept private. But the 9th U.S. Circuit Court of Appeals in San Francisco said the court had the discretion to order the transfer of records.

Seth Waxman, Intel's attorney, said in court filings that the decision allows any foreign company to get information from "its closest commercial rivals simply by asking a foreign enforcement agency to investigate them."

Advanced Micro Devices lawyer Patrick Lynch said in a filing that the European Commission has limited resources and that the records sought in California will help with its investigation.

Business groups including the U.S. Chamber of Commerce and the National Association of Manufacturers are backing Intel's appeal, arguing that the appeals court decision gives foreign companies an opportunity to seek highly sensitive information about policies and strategies of U.S. competitors.

According to the Washington Post, the Bush administration has also asked the Supreme Court to review the law that allows federal courts to help people obtain testimony or information for use in foreign or international tribunals. A government lawyer reportedly said the administration does not believe Intel should have to turn over its documents.